10 Must Reads for the CRE Industry Today (June 8, 2016)

10 Must Reads for the CRE Industry Today (June 8, 2016)

 

  1. Commercial Real Estate Has Room to Rise, Says Marcus & Millichap CEO “Office properties are the only major property type that has yet to surpass pre-recession price levels. That means prices can still go up and commercial real estate investors have room to profit, said Hessam Nadji, CEO of Marcus & Millichap. ‘In a low yield environment commercial real estate shines as an alternative,’ said Nadji. ‘Looking ahead, the usual threats of over-leveraging and overbuilding are not on the scene.’ Marcus & Millichap, down 6.5% year-to-date, is the largest real estate brokerage firm in the U.S., specializing in commercial real estate investment sales, financing, research and advisory services. Office properties have had a ‘late-to-the party recovery,’ according to Nadji, because companies had so much excess space leased as they emerged from the recession that job growth did not immediately translate into demand for additional space.” (The Street)
  2. IRS shuts down channels for REIT spinoffs “The Internal Revenue Service shut down an apparent gap in a tax law that otherwise could have allowed companies across industries to continue spinning off their property holdings into tax-advantaged real-estate investment trusts. The December law was written in response to a wave of deals by retailers, hotels, billboard companies and others that sought the tax-beneficial status of being a real-estate investment trust, or REIT. The law banned companies created in tax-free spinoffs from electing REIT status for 10 years after the transaction. But the law didn't prevent spun-off companies from merging into an existing REIT, among other possible workarounds. ‘I have every confidence that this loophole would have been exploited,’ said Robert Willens, a New York-based tax adviser. ‘It came up in just about every discussion I had with investors regarding the scope of what Congress did last December.’” (MarketWatch)
  3. Anbang’s Wu Cancels Appearance at NYC Real Estate Conference “Anbang Insurance Group Co.’s Wu Xiaohui canceled a speaking engagement at the National Association of Real Estate Investment Trusts’ annual conference being held at the Waldorf Astoria hotel in New York this week. Wu, who was scheduled to speak during lunch on Tuesday, sent his regrets on June 3, saying he was called away with other business, Ron Kuykendall, a spokesman for NAREIT, said in an e-mail. A representative for Anbang in New York said he couldn’t immediately comment.” (Bloomberg)
  4. Why Walmart Will Never Be a Dollar Store “Thrifty U.S. consumers are increasingly looking to dollar stores to save pennies, but the world's largest retailer has no plans to enter the dollar store space. ‘We can't do everything,’ said Walmart CEO Doug McMillon to a group of reporters when asked if the company would pursue the dollar store model. McMillon, speaking after the conclusion of the discounter's big annual meeting Friday, said Walmart has the needs of many different consumers well met via various formats such as supercenters, Neighborhood Markets (grocery stores) and Sam's Club (a warehouse club that caters to higher income shoppers). Just because Walmart isn't keen on launching a dollar store format of its own or dedicating aisles to low quality items priced at $1, but that doesn't mean Walmart isn't working to compete on price with surging dollar stores.” (The Street
  5. Massive Ralph Lauren restructuring to include shuttering 50 stores “Ralph Lauren Corp. is seeking to rectify what it acknowledges have been operational mistakes with a program of cuts and organizational streamlining it calls ‘The Way Forward Plan.’ In the company’s first-ever investor presentation, founder Ralph Lauren admitted it had “dropped the ball,” but was prepared to turn things around. Perhaps most significantly, the vertical retailer plans to close more than 50 stores, or about 10% of its total footprint. Ralph Lauren also intends to bring in a new executive who will be tasked with overseeing the location and design of new stores. In other belt-tightening moves, the company will reduce shipments of inventory to department stores and eliminate an unspecified number of jobs, reducing corporate hierarchy to an average of six from nine layers. Other organizational improvements will include reducing supply chain lead times, employing best-in-class sourcing and executing a disciplined multi-channel distribution and expansion strategy.” (Chain Store Age)
  6. Hudson Pacific Gets Busy with California Office Deals “Hudson Pacific Properties Inc. is buying its corporate headquarters at 11601 Wilshire Blvd. and using the sale of a San Francisco Bay area office building to help fund the $311 million purchase of the office tower. Hudson Pacific entered into an agreement with Blackstone to acquire the 25-story, 500,475-square-foot tower in West Los Angeles from funds managed by the private equity giant. The real estate firm has had its corporate headquarters at the building since its July 2010 initial public offering. The building, known as the Wells Fargo Center, is 83 percent leased. Hudson Pacific said in a news release that the acquisition would be a value-add play through enhanced operations, lease-up of vacant space and re-leasing of space at market rents above current rents. The deal is expected to close by July 31.” (Commercial Property Executive)
  7. Inland Empire Deal Sets Record “Terracina Apartment Homes, a 736-unit property in Ontario, Calif., has traded for $142 million, or about $193,000 per unit. The sellers, MG Properties Group and affiliates of Rockwood Capital LLC sold it to an unspecified private buyer. According to the sellers, the transaction is the largest ever of a single multifamily property in the Inland Empire. One of the largest multifamily communities in the region, the property is located on two parcels totaling 41.3 acres at 3303 South Archibald Ave., within the borders of Ontario Ranch, an 8,200-acre master-planned community. Terracina is also between the Ontario International Airport and the Eastvale community, with access to the I-15. The garden-style apartment community was built in 1988 and features a resort-style pool, spa, lounge, and fitness center.” (MultiHousing News)
  8. Carlyle Gets the Thumbs-Up for 130-Acre Phoenix Project “There are 130 acres surrounding Carlyle Development Co.’s Metrocenter Mall in Phoenix, and now the real estate investment company has won the right to commence a major transformation of the site. The Phoenix City Council just approved Carlyle’s Planned Unit Development, paving the way for a dynamic mixed-use destination. Carlyle has a good starting point as it prepares for the next step of the Metrocenter Mall project, and that is Metrocenter Mall itself. Carlyle acquired the 1.3 million-square-foot shopping center (excluding the individually owned pad sites) from a court-appointed receiver in 2012 for just $12.2 million. Originally developed in 1973, the property was reinvigorated with a $32 million renovation in 2007. Now a bevy of new offerings will soon sprout up around the super-regional mall, courtesy of the PUD.” (Commercial Property Executive)
  9. Busy Billionaires' Row area could get another pricey project “The once stately and sedate stretch of West 57th Street best known for Carnegie Hall, the Art Students League and luxury shops such as Tiffany & Co. and Bergdorf Goodman, has been reborn as Billionaires’ Row, home to the tallest and most expensive apartment towers in New York. Last month, the Steinberg family agreed to sell Lee’s Art Shop’s four-story home at 220 W. 57th St. to a pair of developers, adding another pricey project to a street that remains in play. Thor Equities, the Manhattan commercial real estate development firm led by Joe Sitt, and General Growth Properties, a Chicago-based shopping mall owner, have agreed to close this month on the $85 million purchase of the landmarked Lee’s building. The partners have not yet announced their plans for the 8,400-square-foot lot, which could support as much as 126,000 square feet of development above the landmarked exterior.” (Crain’s New York)
  10. Related in talks to buy Astoria affordable portfolio for $115M “The Related Companies is in talks to buy a 444-unit Section 8 multifamily property with development rights in Astoria for $115 million, its latest move to add to a giant affordable housing portfolio. Related, which got its start in the 1970s buying and rehabilitating affordable housing, is negotiations with Long Island-based landlord Benjamin Properties to buy the 10-building Marine Terrace portfolio, located in the northeast corner of the Queens neighborhood. The Stephen Ross-led firm, which is behind the Time Warner Center, Hudson Yards and 70 Vestry Street, plans to develop 53 new apartments on the Astoria site for the homeless and veterans.” (The Real Deal)
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